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July 1, 2005

FACTBOX-Priorities for Britain’s EU presidency

by Sam Savage

LONDON (Reuters) - Britain assumed the presidency of theEuropean Union on Friday amid financial and political crisis,with leaders struggling to agree a 2007-2013 budget and afterFrench and Dutch voters rejected the EU constitution.

The following is a list of the priorities and challengesfor Prime Minister Tony Blair's six-month chair:

BUDGET ROW

Blair says he will work to produce a budget deal byDecember and will sound out member states bilaterally over thesummer.

Britain's annual rebate from EU coffers and farm subsidiesunder the Common Agricultural Policy (CAP) that largely benefitFrance lie at the heart of the spat over future financing.London is prepared to negotiate its rebate but only if there isa guarantee of reform of the CAP and the overall budget in thesecond half of the 2007-2013 period.

FUTURE DIRECTION

Blair said EU leaders will hold an informal summit in theUK in the autumn to discuss the bloc's "future direction." EUleaders agreed at a summit last month on a "pause forreflection" on a constitution for an enlarged bloc.

ENLARGEMENT

The EU is committed to starting accession talks with Turkeyon Oct. 3 but opposition is rising in parts of Europe tofurther enlargement of the 25-member bloc.

Britain says it will work to start talks, provided Turkeymeets the EU's conditions on human rights and the rule of law.

The EU will review Croatia's progress toward accession inJuly. No date has yet been set for the start of accession talkswith Croatia, which must cooperate fully with the InternationalCriminal Tribunal for the former Yugoslavia.

ECONOMIC/REGULATORY REFORM/JOBS

Britain wants to press ahead with the Lisbon agenda on jobsand growth agreed in 2000. It wants the EU to slash regulation,bolster competitiveness, improve labor market flexibility andincrease investment on research and development.

Britain plans to set up an independent, business-led groupto advise on simplifying the EU's rule book.

Boasting far lower unemployment levels than Germany andFrance, Britain will ask each EU member to publish plans forstructural reform of their labor markets.

London argues liberal economic reforms can be combined withsocial justice and are essential for the EU to compete withemerging giants such as India and China.

COMPETITION AND STATE AID

Britain wants to pursue a new framework for marketinvestigations and a clear timetable for targeting prioritysectors for inspection. It wants to reduce distorting stateaids and plans to chair a conference in London in July.

CHINA ARMS EMBARGO

There is no EU consensus on lifting an arms embargo onChina because of concerns over human rights abuses and tensionwith Taiwan. Britain will chair an EU-China summit later thisyear.

OTHER INITIATIVES:

- Liberalising trade in the services industry across the EU

- Resolving a dispute over a push to limit working hours toa 48-hour week, a move Britain opposes